Back
~
3
min read
· Posted on
February 21, 2024

Quadpay are suing Merrill Lynch over the sale of nearly 13 million Zip shares

The Quadpay founders say Merrill Lynch had a conflict of interest, because they were also working for Zip. Juicy.

What's the key learning?

  • QuadPay are a BNPL firm that were acquired by Zip in 2020
  • Just after QuadPay was acquired, the founders sold almost 13 million shares in Zip via a block trade on the advice of an investment company named Merrill Lynch
  • A block trade is the sale or purchase of a large number of shares at an arranged price between two parties
  • Block trades also need to be initiated by big investment companies, called blockhouses (like Merrill Lynch).

Background: QuadPay are a buy now, pay later service that launched in the US back in 2017. And in 2020, they were acquired by Aussie BNPL Zip for a whopping $400 million.

What happened: Just after QuadPay was acquired….the founders sold almost 13 million shares in Zip on the advice of a company named Merrill Lynch. But the founders are now saying that advice was conflicted. 

What else: Ya see Merrill Lynch were also working for Zip as a corporate adviser. And the QuadPay founders claim that the type of share sale recommended (ie a block trade) made Merrill Lynch more commission too. Juicy, juicy stuff.

So what's the key learning?

💡A block trade is the sale or purchase of a large number of shares at an arranged price between two parties. 

💡Because these trades are so big (i.e. more than 10,000), they can significantly impact the company’s share price. So, to reduce this impact, block trades generally take place outside of the normal market opening times. 

💡Block trades also need to be initiated by big investment companies, called blockhouses (like Merrill Lynch). But with Merrill Lynch working for the QuadPay founders and Zip, we can see how tensions have risen.

Ready to win at money?

Sign up for Flux and join 100,000 members of the Flux family

A button to App StoreGoogle Play store button
Excellent  4.9 out of 5
Star rating